Advance tax is a special concept introduced to reduce the burden of payment of tax. Now companies, business individuals can pay income tax for the year in advance in 4 equal quarterly installments. Although payment of tax is mandatory for all business individuals, AOP’s and Companies , but in fact this mode of payment of tax is beneficial for both government and businesses. As payment of lump sum amount of tax at the time of filing of tax return creates too much burden for any individual, firm or company.
An individual or AOP, whose last assessed income was Rs. 500,000 or more is liable to pay advance tax. The amount of advance tax due for a quarter shall be computed according to the following formula, namely:-
(A/4) – B
A is the tax assessed to the taxpayer for the latest tax year or latest assessment year under the repealed Ordinance; and
B is the tax paid in the quarter for which a tax credit is allowed under section 168 (Withholding Taxes, excluding tax deducted on salary income)
Companies and AOP’s
Association of persons or companies, having any income , chargeable to tax, during the last tax year are liable to pay tax in advance, the amount of advance tax due for a quarter shall be computed according to the following formula, namely
(A x B/C) –D
A is the taxpayer‘s turnover for the quarter;
B is the tax assessed to the taxpayer for the latest tax year
C is the taxpayer‘s turnover for the latest tax year; and
D is the tax paid in the quarter for which a tax credit is allowed under section (Withholding Taxes Deducted)
|Date of Payment
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